Performance Constr., LLC v. Glenn

195 Wash.App. 406

380 P.3d 618

Performance Construction, LLC, Appellant/Cross Respondent,

v.Collette Glenn; Cobalt Mortgage, Inc.; and Mortgage Electronic Registration System, Inc., Respondents,David Keene, Respondent/Cross Appellant.

No. 73808–9–I

Court of Appeals of Washington, Division 1.

FILED: August 15, 2016

Britenae M. C. Pierce, Ryan Swanson & Cleveland, PLLC, 1201 3rd Ave., Ste. 3400, Seattle, WA, 98101–3034, David Anthony Abadir, T–Mobile, 12920 S.E. 38th St., Bellevue, WA, 98006–7305, Fred B. Burnside, Davis Wright Tremaine LLP, 1201 3rd Ave., Ste. 2200, Seattle, WA, 98101–3045, Stephen Michael Hansen, Law Offices of Stephen M. Hansen, PS, 1821 Dock St., Unit 103, Tacoma, WA, 98402–3201, for Respondents.

Rodney T. Harmon, Attorney at Law, P.O. Box 1066, Bothell, WA, 98041–1066, for Appellant/Cross Respondent.

Stephen Michael Hansen, Law Offices of Stephen M. Hansen, PS, 1821 Dock St., Unit 103, Tacoma, WA, 98402–3201, for Respondent/Cross Appellant.

Appelwick, J.¶ 1 This is an appeal from summary judgment quieting title to property in Glenn. Keene, on behalf of D & J Shires LLC, purchased foreclosure property owned by Slighter LLC at a sheriff's sale. He then sought an assignment of redemption rights from Slighter LLC. The assignment of redemption rights from Slighter LLC to Keene was not done by deed and was ineffective. Therefore, Slighter LLC remained a qualified redemptioner and the redemption period was not extinguished. Because the redemption period had not expired when the sheriff's deed issued, the trial court properly declared the sheriff's deed void. Although the sheriff's deed was void, Shires held an inchoate interest in the property at the time it sold the property to Glenn. No redemption of that interest was made. Because Slighter LLC was not a person entitled to claim a homestead in the property, RCW 6.23.120 did not apply to the property and Performance was not entitled to invoke it to purchase the property from Glenn. Therefore, Glenn is entitled to a sheriff's deed and to quiet title of the property. We affirm.

BACKGROUND

¶ 2 In Washington, the judgment debtor and certain lien creditors are granted the statutory right to redeem property sold at a foreclosure sale. Fid. Mut. Sav. Bank v. Mark, 112 Wash.2d 47, 51, 767 P.2d 1382 (1989). Redemption is the process of canceling and aning a defeasible title, such as is created by a mortgage, by paying the debt or fulfilling other conditions. Id. Chapter 6.23 RCW governs the statutory redemption of real property sold at a sheriff's sale. P.H.T.S., LLC v. Vantage Capital, LLC, 186 Wash.App. 281, 287, 345 P.3d 20 (2015). Real property sold subject to redemption may be redeemed by the following persons or their successors in interest:

(a) The judgment debtor, in the whole or any part of the property separately sold.

(b) A creditor having a lien by judgment, decree, deed of trust, or mortgage, on any portion of the property, or any portion of any part thereof, separately sold, subsequent in priority to that on which the property was sold. The persons mentioned in this subsection are termed redemptioners.

RCW 6.23.010(1). Unless redemption rights have been precluded because the mortgagor or his or her successor in interest has abandoned the property, the judgment debtor or any redemptioner may redeem the property from the purchaser at any time within one year after the date of the sale.¹ RCW 6.23.020(1) ; RCW 61.12.093. To redeem the property from the purchaser, the judgment debtor must pay (1) the amount bid at the sheriff's sale with interest, (2) any assessment or taxes paid by the purchaser with interest, and (3) any sum paid by the purchaser on a prior lien or obligation secured by an interest in the property to the extent payment was necessary to protect the judgment debtor or a redemptioner.² RCW 6.23.020(2) ; Vantage, 186 Wash.App. at 287, 345 P.3d 20. The statute contemplates that there may be multiple successive redemptions. See RCW 6.23.040 (stating that if property is redeemed from the purchaser by a redemptioner, another redemptioner may, within sixty days after the first redemption, redeem it from the first redemptioner).

¶ 3 If no redemption is made within the redemption period, the purchaser or the last redemptioner to redeem is entitled to a sheriff's deed at the end of the redemption period. RCW 6.23.060. But, of relevance to this case, there is an exception to this requirement—that entitles a third party to the property—outlined in RCW 6.23.120 :

(1) Except as provided in subsection (4) of this section, during the period of redemption for any property that a person^{[3 ]}would be entitled to claim as a homestead, any licensed real estate broker within the county in which the property is located may nonexclusively list the property for sale whether or not there is a listing contract. If the property is not redeemed by the judgment debtor and a sheriff's deed is issued under RCW 6.12.120, then the property owner shall accept the highest current qualifying offer upon tender of full cash payment within two banking days after notice of the pending acceptance is received by the offeror. If timely tender is not made, such offer shall no longer be deemed to be current and the opportunity shall pass to the next highest current qualifying offer, if any. Notice of pending acceptance shall be given for the first highest current qualifying offer within five days after delivery of the sheriffs deed under RCW 6.21.120 and for each subsequent highest current qualifying offer within five days after the offer becoming the highest current qualifying offer. An offer is qualifying if the offer is made during the redemption period through a licensed real estate broker listing the property and is at least equal to the sum of: (a) One hundred twenty percent greater than the redemption amount determined under RCW 6.23.020 and (b) the normal commission of the real estate broker or agent handling the offer.

(2) The proceeds shall be divided at the time of closing with: (a) One hundred twenty percent of the redemption amount determined under RCW 6.23.020 paid to the property owner, (b) the real estate broker's or agent's normal commission paid, and (c) any excess paid to the judgment debtor.

(3) Notice, tender, payment, and closing shall be made through the real estate broker or agent handling the offer.

(4) This section shall not apply to mortgage or deed of trust foreclosures under chapter 61.12 or 61.24 RCW.

FACTS

¶ 4 On June 12, 2013, the Brookwood Place Condominium Association (Brookwood) commenced a lien foreclosure action pursuant to chapter 61.12 RCW and chapter 64.34 RCW against Slighter Property II LLC (Slighter LLC) and Thomas Slighter and Bonnie Slighter. Brookwood filed the action, seeking to judicially foreclose on the real property (the Property) owned by Slighter LLC for failing to pay Brookwood's monthly condominium assessments.⁴ Greenpoint Mortgage Funding Inc. and Nationstar Mortgage LLC were also named as defendants in the complaint, because they were both lienholders on the Property.

¶ 5 Nationstar and Greenpoint did not answer the complaint, and the trial court entered a default order against them. Brookwood then moved for summary judgment as to the Slighters and Slighter LLC. The trial court granted Brookwood's motion. The trial court entered a personal judgment of $20,772.04 against the Slighters and Slighter LLC and a decree of foreclosure as to all defendants. The trial court's order declared the lien foreclosed and ordered the Snohomish County Sheriff to sell the Property and apply the proceeds to the payment of the judgment against the defendants. The order noted that the period of redemption would be 12 months and that the sheriff would be ordered to issue a sheriffs deed at the termination of the 12 month period.

¶ 6 On November 1, 2013 the trial court entered an order of sale, commanding the sheriff to sell the Property. Pursuant to the trial court's order, the sheriff sold the Property at public sale on January 3, 2014. D & J Shires LLC (Shires) was the highest bidder. It purchased the Property for $36,000. David Keene, a respondent and the cross-appellant in this action, is a member of Shires.⁵ On January 30, 2014, the Slighters, on behalf of themselves individually and on behalf of Slighter LLC, assigned all redemption rights in the Property to Keene. On January 31, 2014 the trial court confirmed the sheriff's sale.

¶ 7 On March 4, 2014—months before the January 5, 2015 expiration of the 12 month redemption period⁶ —Keene filed a motion for an order directing the sheriff to issue a sheriffs deed free and clear of any rights of redemption for the Property. Keene's motion stated that because the Slighters and Slighter LLC assigned their redemption rights to him and no longer possessed them, there were no redemptioners who could exercise a right of redemption for the Property.⁷ Keene's motion stated, “Here, since no eligible redemptioners exist, the Court should deem that the period of redemption is expired and direct the ... Sheriff to issue a Sheriff's Deed to Mr. Keene.”

¶ 8 That same day, a commissioner entered an order directing the sheriff to issue a sheriff's deed. The order stated that there are no qualified redemptioners for the Property as defined in RCW 6.23.010. It directed the sheriff to issue Keene a sheriff's deed to the Property free and clear of any rights of redemption. On April 14, 2014, the sheriff issued the deed to Shires, not Keene.

¶ 9 In May 2014, Collette Glenn purchased the Property from Shires for $175,000. Glenn purchased the Property by taking out a loan from Cobalt Mortgage, Inc. (Cobalt) and paying the rest in cash. To secure repayment of her loan, Glenn executed a deed of trust encumbering the Property. Shires conveyed its interest in the Property to Glenn via a statutory warranty deed that was recorded on May 6, 2014.⁸ Under the terms of the deed of trust, Cobalt was the lender and Mortgage Electronic...